Carbon Offsets: Definitions

Additionality

The GHG reductions must be surplus to regulation and beyond what would have happened in the absence of the carbon market or in a business-as-usual scenario based on a performance or project specific standard methodology.

Baseline Emissions

The calculated emissions for a given period of time (usually a year). Baseline emissions are calculated to determine what the impact an emissions reductions action will have.

Business-as-Usual

The absence of any action to intentionally reduce carbon emissions.

Carbon Dioxide Equivalent (CO2e)

A measure used to compare the emissions from various greenhouse gases based on their global warming potentials (GWP). CO2 is used as the baseline, and assigned a GWP of 1. Methane (CH4), by comparison, is 23 times more potent a GHG than CO2, and assigned a GWP of 23. This signifies that, in terms of warming effect, 1 ton CH4 emissions = 23 tons CO2e emissions.

Carbon Financial Instrument (CFIs)

The commodity traded on the Chicago Climate Exchange (CCX) is the CFI contract, each of which represents 100 metric tons of CO2 equivalent. CFI contracts are comprised of Exchange Allowances and Exchange Offsets.

Carbon Offset Registry

A serialized database of carbon offsets that enables one to track the offset or REC. (See: American Carbon Registry,) Registering carbon offsets prevents double counting.

Carbon Sequestration

Physically removing and storing carbon dioxide from the air or from an emissions source. Trees sequester and store carbon dioxide as part of their biological process.

Carbon Sinks

Areas where carbon sequestration outpaces carbon emissions to produce a net deficit in carbon emissions. Oceans are the world’s largest carbon sink.

Clean Development Mechanism (CDM)

The Clean Development Mechanism (CDM), defined in Article 12 of the Kyoto Protocol, allows a country with an emission-reduction or emission-limitation commitment under the Kyoto Protocol (Annex B Party) to implement an emission-reduction project in developing countries. Such projects can earn saleable certified emission reduction (CER) credits, each equivalent to one tonne of CO2, which can be counted towards meeting Kyoto targets.

Accounting for a carbon offset more than once. Carbon offsets may be serialized with a public registry to prevent double counting.

Emissions Inventory

The calculation of emissions sources within a given scope. Emissions inventories are taken to help gauge sources of emissions and areas for reductions.

Emissions Trading

An approach to reducing emissions by providing economic incentives that reward emissions reductions and penalize emissions that exceed an agreed-upon amount. This system is sometimes called cap and trade.

Greenhouse Gas

Gases in the atmosphere that absorb and emit radiation, thus creating a “greenhouse effect” that warms the planet. The most common greenhouse gases are carbon dioxide, methane and water vapor.

Joint Implementation Kyoto Protocol

The mechanism known as “joint implementation,” defined in Article 6 of the Kyoto Protocol, allows a country with an emission reduction or limitation commitment under the Kyoto Protocol (Annex B Party) to earn emission reduction units (ERUs) from an emission-reduction or emission removal project by another Annex B Party, each equivalent to one tonne of CO2, which can be counted towards meeting its Kyoto target.

Leakage

When the emissions reductions achieved at a given site directly result in emissions increases or decreases elsewhere. For example: if an avoided deforestation project in one location causes demand for timber to rise and deforestation to occur elsewhere.

Metric Ton of Carbon Dioxide (Mt CO2)

1 metric ton of carbon dioxide = 2,204.6 lbs carbon dioxide

Permanence

The useful life of the project. This term is most commonly used in reference to forest based carbon offsets, where the life of the project is typically measured by the decade.

Real

The assurance that a project is additional, verifiable, and permanent. Information to verify a project’s reality might include mention of the verification standard to which the project adheres to.

Validation

The process of deciding if a project, as planned and documented, will be a “valid” source of verifiable emissions reductions.

Verification

Confirmation that the estimate of emissions reductions which the project developer or proponent has developed is in keeping with the validated plan and that the calculations are correct.